Canada slides in global economic rankings
TORONTO Canada is losing its competitive edge, according to the World Economic Forum’s latest Global Competitiveness Index published Wednesday.
The country slipped two places from last year’s survey to end as the world’s 14th most-competitive economy, eclipsed by fellow developed nations the United States, Germany, United Kingdom, Sweden and Japan — among others.
Canada had slipped two places in last year’s survey, too.
“Canada’s economy has been hit by external shocks stemming from global trade tensions. The less favourable economic environment has been reflected in somewhat more negative business leaders’ views across several dimensions,” the WEF said. “For instance, Canadian business leaders have revised down their assessment on two important aspects of competition: competition in services (where it ranks 62nd, losing 2.5 points in score and falling 18 places in rank), and the labour market (it ranks 54th on internal labour mobility, falling 25 places over 2018 and losing almost 4 points in score).”
The WEF recommends improving the adoption of information and communications technology if Canada is to emerge as a technological powerhouse.
“Further improvements in mobile broadband infrastructure and usage (67th), greater investments in R&D (23rd) and collaboration between companies, universities and research centres (15th) would benefit Canada’s competitiveness going forward,” WEF said.
In one key criteria — technology governance — Canada was ranked 27th in the world out of 141 countries, worse than Saudi Arabia (ranked 11th), China (24th) and India (25th). Canada also fared poorly in environment-related treaties in force (ranked 95th) and complexity of tariffs (ranked 97th). The country leads in macroeconomic stability (it shared the top spot with other countries) and corporate governance (4th).
The U.S. dropped from the top spot in the report, losing out to Singapore. Hong Kong, the Netherlands and Switzerland made up the rest of the top five, according to the survey. On the U.S., it noted growing uncertainty among business leaders and said trade openness has declined.
The forum focused its report on continued low productivity growth a decade after the financial crisis, calling this the Us$10-trillion question — the amount injected by the world’s four major central banks through 2017. In line with others, its view is that while monetary stimulus helped pull the global economy out of recession, it wasn’t the solution for all problems.
With a new slowdown emerging, the WEF said fiscal policy has been underused. It joined the chorus calling for more government support, particularly in investment to boost productivity.
It also said central banks must take some blame for weak productivity, as their trillions of stimulus keep zombie firms alive, sometimes crowding out stronger businesses. Given monetary policy resources are so depleted, it said investment-led stimulus would be an “appropriate action to restart growth in stagnating advanced economies.”
“Although loose monetary policy mitigated the negative effects of the global financial crisis, it may also have contributed to reducing productivity growth by encouraging capital misallocation ... As monetary policies begin to run out of steam, it is crucial for economies to rely on fiscal policy and public incentives,” the report noted.
While the U.S. drops down to second in the survey of 141 countries, the WEF said it remains an “innovation powerhouse,” ranking first in business dynamism and second on innovation capability. Also in the top 10 were Japan, Germany, Sweden, the U.K. and Denmark.